Murdoch’s latest scandal

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A hard-to-comprehend story in today’s Wall Street Journal alleges that Langhoff transgressed by pressuring Wall Street Journal Europe reporters into covering an advertiser, consulting firm ELP, and by contractually promising that WSJE reporters would cover ELP in “special report” sections. (The tainted stories in question now carry a disclaimer.)

There’s a third dimension to the scandal, which the Wall Street Journal article soft-pedals. It turns out that bulk-sold, discounted copies of WSJE were sold to the same advertiser, ELP, to boost circulation. I defy any reader to cull the salient passages and find any evidence or hint of circulatory wrong-doing by the publication.

For that sort of coverage, see today’s piece in the Guardian by Nick Davies, “Wall Street Journal circulation scam claims senior Murdoch executive.” Davies exploits the circulation angle, alleging that the WSJE publisher “set up a complex scheme to channel money to ELP to pay for the papers it had agreed to buy—effectively buying the papers with the Journal‘s own cash.” The Guardian also calls Langhoff’s resignation a “damage limitation exercise” prompted by its inquiries into the scandal. The Wall Street Journal calls the resignation a result of an “internal probe” into the special-report articles and a circulation agreement with ELP.

Will the scandal go bigger or will it burn itself out in a couple of days? Rupert Murdoch’s News Corp., which owns the Wall Street Journal Europe,has already copped to the journalistic sins of having a publisher promise an advertiser coverage and of leaning on reporters to produce it. This behavior is considered very, very, unclean in the world of publishing when conducted covertly. But when the advertiser-pleasing copy is produced overtly in special sections, the worst publishers are accused of is opportunism. Today, most quality newspapers assemble special sections themed to energy, transportation, education, philanthropy, investing, health, et al. These sections, which contain soft or backgrounderish copy, are propped up by lucrative ads from the major industries doing business in the theme area. So great is the publisher’s appetite for special sections that if the New York Times could persuade Eukanuba, Purina, and Hartz Ultraguard Plus Rid Worm tablets to take out gigantic ads, it would gladly print a “Your Dog’s Retirement” section. Twice a year.

The Financial Times, for example, hammers together special sections with laughable regularity. Yesterday’s FT special section, “Canadian Energy,” contains big-ass ads from Chevron, Shell, and the American Petroleum Institute. Are you dying to read “Oil shifts country’s centre of gravity”? Does “Technology opens far-flung possibilities” float your boat? Then grab a copy before they all disappear.

The articles in most special sections aren’t embarrassing or unethical as much as they’re useless. You’ll rarely find a critical article in a special section, so why bother reading? The intended audience for special sections isn’t readers, it’s advertisers. As a rule, special sections are two steps up from supplements titled “Advertising Supplement,” which are written by outside writers, and two steps down from a newspaper’s regular coverage. There are good special sections out there—I’m thinking of the ones that run in the Economist—but most of them suck.

As for the Wall Street Journal Europe‘s circulation problems, that scandal could grow, too, especially if Murdoch’s minions don’t force others to walk the plank. (The best way to stanch a scandal is to feed it human flesh.) But again, the standard newspaper circulation scandal isn’t what’s illegal, it’s what’s legal, to cite Michael Kinsley. For decades, publishers and advertisers have used their captive, the Audit Bureau of Circulation, to expand the definition of what constitutes paid circulation. The definition has grown so broad that it wouldn’t surprise me if it started including monarch butterflies and fallen autumn leaves in its official counts of newspaper circulation. For more about the ABC and how the organization’s blind-eye generosity contributed to the last decade’s circ scandals at Newsday, the Dallas Morning News, Hoy, and the ChicagoSun-Times, see my 2004 piece from Slate.

Still, even by the low standards of the industry, the Wall Street Journal Europe circ shenanigans seem pretty wild. According to the Guardian, the Wall Street Journal Europe had a circulation of 75,000 in 2010 of which 31,000 of which were sold at a steep discount for distribution to students, who “may or may not have read them.”

What’s the bigger scandal? That the WSJE had a pitiful circulation of 75,000 in 2010? Or that 41 percent of that circulation was ginned up in an arrangement that the Audit Bureau of Circulation deemed “legitimate,” as Davies puts it? I think the former.

How will Murdoch get out of this one? The last time one of his newspapers got him into ethical trouble, he had it exterminated. But killing News of the World didn’t stop the bleeding. For such an ethically compromised businessman, this has got to be a sideshow.

PHOTO: News Corp Chief Executive and Chairman Rupert Murdoch arrives, sitting next to a copy of the Wall Street Journal, to attend a parliamentary committee hearing at Portcullis House in London July 19, 2011. REUTERS/Andrew Winning

i stopped my paid membership to WSJ when they bought it… they turned WSJ into a red neck haven… i bet if they sell it the price will be $1B 1/6th of their acquisition price… any organization owns Fox Network shows their ethical broadband… which is non-existent… murdoch needs to go…

This seems especially problematic since the name sake of the Wall Street Journal Europe could be implicated by association as the previous comments seem to indicate. Could this actually be happening at the WSJ? I doubt it, but I’m not sure. In any event, Jack Shafer’s analysis and writing style are top notch. I just hope there’s more substantive comments to follow.